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  1. #1
    Senior Member bikecrate's Avatar
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    Do You Own The House Or Does The House Own You?

    Last year I replaced my windows, doors and garage doors. I painted the outside of the house. I still have my back porch to rebuild and need to replace my gutters and porch railings. Today I found out my a/c is shot. This is costing me a ton of time and $$$$.

    I guess I should be grateful that I have shelter.

  2. #2
    Up on the Down Side CyLowe97's Avatar
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    The bank owns the house..... I am paying them very slowly for the honor to hold the deed someday...

    Still beats pouring my money into a rental property.

    The incidentals to keep the house in good order are a given and help me and my wife to improve our home-improvement skills over time.

  3. #3
    Senior Member DannoXYZ's Avatar
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    I own my house outright. No debt, no interest to anyone. With the money that would've been wasted on interest-payments, I get to travel, race cars and buy go-fast bike goodies! Although I do owe $5000+ a year in property-taxes, no way around that. Interestingly enough, my property-taxes are higher than what I used to pay in rent...


    Quote Originally Posted by CyLowe97
    Still beats pouring my money into a rental property.
    Not if that extra money you've got to cough up for mortgage-payments could be earning bigger returns elsewhere...

  4. #4
    Up on the Down Side CyLowe97's Avatar
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    Quote Originally Posted by DannoXYZ
    I own my house outright. No debt, no interest to anyone. With the money that would've been wasted on interest-payments, I get to travel, race cars and buy go-fast bike goodies! Although I do owe $5000+ a year in property-taxes, no way around that. Interestingly enough, my property-taxes are higher than what I used to pay in rent...


    Not if that extra money you've got to cough up for mortgage-payments could be earning bigger returns elsewhere...
    Yes, this is a valid statement. But I know of properties near mine where renters pay nearly as much as my monthly mortgage payment.

    Plus, a certain part of the interest and property taxes come back in the form of deductions on the federal income tax form in the U.S. Property taxes also come back to one in the form of public education for the children (if you got kids, and if you send your kid to a public school). Cheaper than a private school, and if the parent and child are willing to put in the effort, the public education can be as enriching as a private school. But that often depends on the particular school district.

    Not having a landlord is worth some of that extra fuss, though there is the home-owners association for any construction project....

  5. #5
    In Memory of One Cool Cat Blackberry's Avatar
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    A bit of free advice that I wish I had taken: If you're gonna buy a house that you plan to stay in, see if you can swing a 15-year mortgage. It's not that much more and the years do go by.

    If I had done that, my house would have been paid off a few years ago. Oh well.
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    Senior Member Keith99's Avatar
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    The cat owns the house. He just lets me and the dogs live there.

  7. #7
    That darn Yankee TexasGuy's Avatar
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    Quote Originally Posted by Keith99
    The cat owns the house. He just lets me and the dogs live there.
    hehe
    Life is about hanging onto what you think is important and finding out what really is important.
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    if you pay property taxes, you dont own your house and you never will

  9. #9
    That darn Yankee TexasGuy's Avatar
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    Who doesn't pay property taxes?
    Life is about hanging onto what you think is important and finding out what really is important.
    "Stop Ruining my joke!", "No, a joke implies humor attached at no additional cost"
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  10. #10
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    not all states or counties have property taxes, just like not all states have income taxes

    my rent back in 1984 was $260/month, now its $285/month, food for thought

    houses are only investments as long as they increase in value, how much will some of you guys' McHouses be worth in 3-4 years when your gas bill is more than your mortgage payment and you cant afford to cool it in summer? At the same time, your local municipality will probably RAISE your property taxes. Hope your prepared. You been amply warned years in advance. My MOM didnt heed my warnings, now she's stuck already.

  11. #11
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    Quote Originally Posted by Blackberry
    A bit of free advice that I wish I had taken: If you're gonna buy a house that you plan to stay in, see if you can swing a 15-year mortgage. It's not that much more and the years do go by.

    If I had done that, my house would have been paid off a few years ago. Oh well.
    Great advice, we managed to lock-in a 15y three years ago at 5% when we bought our current house. Payments are higher but the overall savings in interest will be huge, and in 12 years we'll still be a long way from retirement (but probably paying for some college ).

    On the other hand, if you don't plan on staying long, look at 5 year fixed or even 1 year or low rate variable if you can take the risk. We took a 30 years on our previous home we only kept for 2,5 years, that wasn't the smartest choice knowing we would not stay there very long. It wasn't all bad because the sale generated enough cash to pay off our vacation home we purchased earlier and a good downpayment on the current one. In many ways we feel lucky, considering the difficult housing market in this part of the country.

    To answer the OP, our current house is like yours bikecrate's a constant upkeep (built in 1830) but I wouldn't trade for a rental. Great open space, neighbors far enough to crank up the sound, and most of all awesome roads to ride everywhere.

  12. #12
    That darn Yankee TexasGuy's Avatar
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    Quote Originally Posted by pedex
    not all states or counties have property taxes, just like not all states have income taxes

    my rent back in 1984 was $260/month, now its $285/month, food for thought

    houses are only investments as long as they increase in value, how much will some of you guys' McHouses be worth in 3-4 years when your gas bill is more than your mortgage payment and you cant afford to cool it in summer? At the same time, your local municipality will probably RAISE your property taxes. Hope your prepared. You been amply warned years in advance. My MOM didnt heed my warnings, now she's stuck already.
    Houses are an investment period. even if they lose value. Because you pay almost the same amount of money in rent and bam once its paid for its pretty much paid for. Now the people who hang on and take 30 years to pay for it - well I can't really speak for those people. Every house we've ever bopught we've paid for it as much as possible. We didn't eat good tdill the house was paid for If I had a house I'd have it made.
    Life is about hanging onto what you think is important and finding out what really is important.
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  13. #13
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    Well, Ive got tons of neighbors who's property taxes exceed their mortgage payments they USED to have, their houses are paid off, now they have big property tax payments..........IE they do NOT own their houses. Is that an investment? Nope, its rent.

  14. #14
    Senior Member DannoXYZ's Avatar
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    TexasGuy and pedex, you guys are talking about the same thing, just different aspects of it. The main difference is a matter of cost and area. Taxes are everywhere, I pay more in property taxes than what I used to pay in rent as a student over 10-years ago. Equity-appreciation varies by area. Properties in Texas, especially the heartland haven't appreciated very much the past 30-years. Putting your money there would've seen negative gains due to average 7% inflation in the past 30-years (double-digit in the 70s).

    In other areas, like where I live, property prices were appreciating at 15% in '96, or gaining double the normal-rate for real-estate. If you got in 10-years ago, you would've doubled your property-price in 5-years, sell and collect a 50% gain (other 50% goes to the bank as mortgage-interest and fees).

    That's the hidden cost that a lot of people do not consider, interest, free money to someone. Maintenance and insurance costs are also factors that homeowners are only too aware of. There's three scenarios... with say... $3000/month housing budget:

    I. RENT PROPERTY
    -1000/month rent
    +2000/month cash goes into savings
    +1% monthly investment gain
    ------------
    -12000/year rent
    +24000/year savings increase
    +$2500/year investment gain roughly
    ------------
    +14500/year TOTAL


    II. BUY PROPERTY ON MORTGATE
    -$3000/month mortgage
    -450/month property-tax
    -300/month maintenance&repairs
    +500/month income-tax return
    +.5% monthly property-appreciation
    ------------
    -36000/yearly mortgage
    -5400/year property-taxes
    -3600/year maintenance&repairs
    +6000/year income-tax return
    +25000/year property-appreciation
    ------------
    -14000/year TOTAL


    III. OWN PROPERTY OUTRIGHT
    -450/month property-tax
    -300/month maintenance&repairs
    +.5% monthly property-appreciation
    +3000/month cash goes into savings
    +1% monthly investment gain
    ------------
    -5400/year property-taxes
    -3600/year maintenance&repairs
    +25000/year property-appreciation
    +36000/year savings increase
    +4000/year investment gain
    ------------
    +56000/year TOTAL


    You can juggle the numbers on renting vs. mortgage and in some cases, it's better to rent than buy, like Pedex. Because you've got a lot of cash left over that can earn you better returns elsewhere. TexasGuy is right on in that ALL housing is investments. You can't take it with you when you die and depending upon your family's wishes, it may be better off as cash for them. In which case, you need to examine the numbers of years and how much built-up equity and appreciation you'll get before you die. When my mum died, she left me a $750,000 house, but had over $1,000,000 in 1st/2nds and misc. other equity loans on it. It was a loss for everyone, me, and the various banks holding loans as the sale-price on the house ended up being less than principal loaned out by the banks.

    CyLowe97's also right on with buying if your mortgage would be the same as rent. However, it depends upon the area, the banks knows the game too well. Areas where mortgages payments are similarr to rentals aren't appreciating very much. Around here, to buy a property that you can rent for $1000 would cost you $4000 in mortgage payments. And real-estate prices have been stagnant for 5-years around here, so in my area, it would be better to rent or buy outright. Also tax-relief is a con-game. Unless you're in the 100% tax-bracket, you'll ALWAYS get back less in tax-returns than what you've paid out in interest. So +6000 tax-returns is still a loss for having paid out -20000 in mortgage-interest. Better to not have paid that $20000 in the beginning and put it into FX for a positive return instead.

    (BTW - I didn't even factor in renting out my house, which brings in another +20000/yr, which raises my total to +76000/yr . Didn't add that in because I gotta live somewhere.)
    Last edited by DannoXYZ; 03-22-06 at 08:41 PM.

  15. #15
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    ^^all of which is predicated on a very short window of history which about to get fubarred

  16. #16
    Senior Member DannoXYZ's Avatar
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    Damn, my hot-tub's broken! My maintenance costs for the year just doubled!

    BTW - new "low income" housing project starting up near intersection of hwy-154 & 101. To qualify, you have to have combined household-income of less than $90k/year. It would be interesting to see what the percentage of these new homeowners are natives vs. immigrants...

  17. #17
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    Quote Originally Posted by DannoXYZ
    Damn, my hot-tub's broken! My maintenance costs for the year just doubled!

    BTW - new "low income" housing project starting up near intersection of hwy-154 & 101. To qualify, you have to have combined household-income of less than $90k/year. It would be interesting to see what the percentage of these new homeowners are natives vs. immigrants...
    Santa Barbara, as I recall, is downright swank. Usually housing such as the one near you requires residents to earn less than 80% of the median household income for the county in which the housing is located. Given the high incomes in SB, the $90k figure is not surprising. That figure is typically for a family of four--so in theory each parent would be earning less than $45k per year--hardly rolling in the dough in SB. Single-parent households would likely be a little more than $45k, depending on the number of kids.

    I don't get the immigrant remark, and I really should go here, but...dive right in. Um, perhaps you are Chippawa or something (i.e., a "native"), but my family are immigrants from Ireland, Portugal, Germany, Hungary, England, Wales, France, and Holland. They started immigrating in 1730 or thereabouts, with the Portuguese side coming over in 1883 chasing whales. Every one of them an immigrant (not the whales).

    As for the real estate, it's very admirable that you own your house outright. That takes discipline, or winning the lottery. I own two houses, or very small parts of them given that I owe the banks, but I'm definitely out ahead from being a renter. In some markets, renting might make more sense, but I'm not familiar with those markets.

  18. #18
    Up on the Down Side CyLowe97's Avatar
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    DannoXYZ.... As usual, you bring a wealth of information to the table. I always learn something from your posts.

    As for mortgages in a stagnant area, when we chose to move out of renting in downtown Chicago 4 years ago, my wife and I built a house in a far suburb (I worked out that way anyway). Building was the right thing for us after looking into a lot of options. We saved up enough of a down payment that our monthly mortgage is managable. Even after my wife left her job (which paid quite well) to have our first child 1.5 years ago, we knew that we could continue to make the mortgage payment, as well as put a significant amount into the 401k and into savings for our everyday lives. Without her salary we are more careful with our purchasing, but the big thing is that the only debt we carry is the mortgage.

    The central question on the thread is perhaps the wrong question. Having a mortgage is seen as positive in most aspects. The problem is when people start getting into Zero-Down or Interest Only mortgages, or when they don't know how a 5 year ARM will kill them if they don't unload the house soon enough. Or when couples don't understand that there is an easy way to avoid the inane thing that is PMI on their first house. PMI (Private Mortgage Insurance) is the textbook definition of burning money until they pay off 20% of the mortgage. Avoiding it often just means putting down 10% on the house and requesting an 80/10/10 loan, where the other 10% is a 2nd mortgage. We did this and I have been doubling up the 2nd mortgage payments so that it will be gone far before its 15 year timeframe is up. So I'm paying prinicpal on the house instead of paying PMI into an empty hole.


    The other issue is that people carry negative debt on their credit cards, or financing more car than they need. It's so easy to get into, but so hard to get out unscathed.

    A little financial discipline goes a long way. I just want to start following the DannoXYZ model.... he's got it made!

  19. #19
    Senior Member DieselDan's Avatar
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    Quote Originally Posted by DannoXYZ
    Damn, my hot-tub's broken! My maintenance costs for the year just doubled!

    BTW - new "low income" housing project starting up near intersection of hwy-154 & 101. To qualify, you have to have combined household-income of less than $90k/year. It would be interesting to see what the percentage of these new homeowners are natives vs. immigrants...
    Less then $90K a year to qualify for low income housing? Damn. Here the cut off for a family of 4 is $22K.
    Bikes use brakes to stop.

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  20. #20
    2-Cyl, 1/2 HP @ 90 RPM slvoid's Avatar
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    That's rich... they don't even consider 90k a year low income in NYC...

  21. #21
    Senior Member Albany-12303's Avatar
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    F**k the American dream.

    Owning a nice house with a double Garage in the burbs is a pain in the ass!
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  22. #22
    Senior Member bikecrate's Avatar
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    I guess I shouldn’t complain. I love my house. It was built in 1950 (I always try to imagine a postwar couple moving in after it was built). It has just the right size interior, good yard, big mature oaks, hardwood floors, big picture windows with a view of the brick streets. Things like this A/C problem drive me crazy though. I think my bike riding is going to get cancelled this weekend due to the back porch. Sometimes I wish I lived in a tent!!

  23. #23
    Banned. FXjohn's Avatar
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    Quote Originally Posted by DannoXYZ
    I own my house outright. No debt, no interest to anyone. With the money that would've been wasted on interest-payments, I get to travel, race cars and buy go-fast bike goodies! Although I do owe $5000+ a year in property-taxes, no way around that. Interestingly enough, my property-taxes are higher than what I used to pay in rent...


    Not if that extra money you've got to cough up for mortgage-payments could be earning bigger returns elsewhere...

    Some states don't have propert tax...Texas is one I think. How nice would that be once your house was paid off?

  24. #24
    Senior Member Albany-12303's Avatar
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    Quote Originally Posted by Albany-12303
    F**k the American dream.

    Owning a nice house with a double Garage in the burbs is a pain in the ass!

    Actually I apologize - the above statement is kind of harsh and may offend the majority of people that love house ownership.
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  25. #25
    Kicked out of the Webelos bluebottle1's Avatar
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    Quote Originally Posted by Blackberry
    A bit of free advice that I wish I had taken: If you're gonna buy a house that you plan to stay in, see if you can swing a 15-year mortgage. It's not that much more and the years do go by.

    If I had done that, my house would have been paid off a few years ago. Oh well.

    Good advice. When I first bought my place, I had a thirty year mortgage. Two years later, I re-financed with a lower interest rate and a 15 year. My payment actually went up, but my equity is growing much faster than it would have with a 30 year. Add to that the fact that the value of the place has near doubled in less than six years, and I feel pretty good about it.

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